(Alliance News) - Stock prices in London are seen opening higher on Thursday, tracking a rally in US and Asian equity markets, after the Federal Reserve, as expected, raised interest rates from historic lows.
In early company news, movie theatre operator Cineworld hailed its recovery prospects with audiences set to return to cinemas this year. Food delivery firm Deliveroo expects to become profitable in the near future. Transport firm National Express said it is a better suitor for Stagecoach than rival DWS.
IG futures indicate the FTSE 100 index will open 13.32 points higher at 7,305.00. The index closed up 115.98 points, or 1.6%, at 7,291.68 on Wednesday.
Cineworld said it delivered a resilient performance in challenging market conditions and that it was in a good position to benefit from the expected industry recovery.
The world's second largest cinema chain, behind US-based AMC, noted its results for 2021 include a period of temporary closures from January to April-May due to Covid-19 restrictions and a limited film slate.
Revenue more than doubled to USD1.80 billion in 2021 from USD852.3 million in 2020, and the company's pretax loss narrowed sharply to USD708.3 million from 2020's massive USD3.0 billion.
Turning to returns, Cineworld said dividends remain suspended as it continues to prioritise liquidity preservation during its recovery from the pandemic.
Looking ahead, Cineworld pointed to a gradual recovery of admissions and demand since re-opening, supported by strong retail sales and premium formats.
January and February of this year were hurt by Omicron and the lack of major movie releases, but Cineworld anticipates strong trading starting in March, with the new Batman release and supported by a strong and full film slate in 2022. These titles include, 'Fantastic Beasts: The Secrets of Dumbledore', 'Doctor Strange in the Multiverse of Madness', 'Thor: Love and Thunder', and 'Black Panther: Wakanda Forever'.
Food delivery firm Deliveroo said 2021 was a year of strong growth, strategic progress, which it believes will lead to long-term profitability.
For 2021, revenue was GBP1.82 billion, up 57% from GBP1.16 billion in 2020, but Deliveroo's pretax loss widened to GBP298.2 million from GBP212.6 million.
Deliveroo said delivery orders totalled 300.6 million last year, up 73% from 173.7 million orders in 2020, and gross transaction value was GBP6.63 billion, up 67% from GBP3.98 billion in 2020.
Looking ahead, Deliveroo guides for 15% to 25% growth in GTV at constant currency in 2022, with a higher growth rate in the second half than in first half, due to a stronger comparative for the first half. It forecasts 2022 adjusted earnings before interest, tax, depreciation and amortisation of negative 1.5% to 1.8% of GTV versus negative 2.0% in all of 2021 and negative 3.2% in second half of last year.
Deliveroo expects to reach adjusted Ebitda breakeven at some point in the second half of 2023 or first half of 2024.
Chief Executive Officer Will Shu said: "This year it is clear that all three sides of our marketplace in Europe will face headwinds due to inflationary pressures, the removal of economic stimulus and the broader geopolitical and economic impacts of the conflict in Ukraine. We will continue to monitor developments closely. Our 2022 guidance reflects our caution on these factors, but we are confident in our ability to adapt financially to a rapidly changing macroeconomic environment."
National Express outlined its case for its previously agreed all-share merger with Stagecoach saying its offer presents a superior value creation opportunity compared to that of DWS, which Stagecoach now support.
National Express said its all-share offer for Stagecoach is worth 125p to 170p per share compared to 105p in cash from DWS.
The FTSE 250 firm said the DWS cash offer "materially undervalues Stagecoach" and asked Stagecoach shareholders to take no action on the DWS cash offer. National Express made no change to its own offer, saying it "will remain disciplined in its assessment of its options going forward".
Calls for a higher open in London on Thursday come after the Federal Reserve enacted its first interest rate hike since 2018.
The US central bank raised the federal funds rate range to 0.25% to 0.50% on Wednesday, as widely forecast by the market.
Wall Street ended sharply higher Wednesday, with the Dow Jones Industrial Average up 1.6%, S&P 500 up 2.2%, and Nasdaq Composite up 3.8%.
The dot-plot was in focus. The chart indicated a median expectation of a 1.9% funds rate at the end of 2022. The median view for the funds rate at the end of 2022 was 0.9% back in December. For 2023, the median forecast rises to 2.8%, from 1.6% back in December.
Fed Chair Jerome Powell said: "In terms of the pacing, I would point out there are seven remaining meetings this year. This isn't something we discuss or debate or agree on, but there's seven remaining meetings and there's seven rate hikes. I would add, there's also the shrinkage of the balance sheet...that might the equivalent of another rate increase."
In Asia on Thursday, the Japanese Nikkei 225 index closed up 3.5%. In China, the Shanghai Composite ended up 1.4%, while the Hang Seng index in Hong Kong was up 6.3%. The S&P/ASX 200 in Sydney closed up 1.1%.
The Hong Kong market has been off to the races over the past two days, the Heng Seng having closed up 9.1% on Wednesday. Chinese authorities on Wednesday said they would maintain capital market stability and adopt measures to handle risks for troubled property developers.
CMC Markets analyst Michael Hewson said: "We...didn't get any surprises from the Federal Reserve, which has set us up for a positive European open later this morning, with Asia markets also having another strong session, after yesterday's China inspired surge."
Meanwhile, Ukraine accused Russia on Thursday of bombing a theatre that was sheltering more than 1,000 civilians in the city of Mariupol.
The latest assaults on civilians across Ukraine came as President Volodymyr Zelensky made a searing appeal for help to the US, which responded by pledging USD1 billion in new weapons to fight Russia's invading army.
Officials across Ukraine are struggling to count the civilian dead - with authorities saying 103 children have been killed since the invasion began - who have been targeted in homes, hospitals, ambulances and food queues.
In the port city of Mariupol - where more than 2,000 people have died so far - a Russian bomb hit the Drama Theatre, which city council officials said had been housing over 1,000 people.
The pound was quoted at USD1.3167 early Thursday, up from USD1.3098 at the London equities close Wednesday, ahead of the Bank of England interest rate decision at midday in London.
The BoE is widely expected to enact its third successive rate hike, which would take the key Bank Rate to 0.75%.
The euro was priced at USD1.1032, higher against USD1.1005. Against the Japanese yen, the dollar was trading at JPY118.78, up from JPY118.50.
Brent oil was quoted at USD100.65 a barrel Thursday morning, up sharply from USD99.33 late Wednesday. Gold stood at USD1,934.40 an ounce, higher against USD1,908.85.
The economic events calendar on Thursday also has the latest weekly US jobless claims numbers at 1230 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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